The big problem with the no-inventory model is that people no longer see the store as the place to go get an item. Instead, their competitors may or may not have the item too, so store loyalty disappears.
The owner of perhaps the nations largest private gun shop (Specialty Sports and Supply, Colorado Springs, Colorado) has a simple philosophy: “I can’t sell it if I don’t have it.” He grew into the largest store because people know if they want it he probably has it, so his store became the destination shop. “Destination” is the primary word retailers forgot that people like Sam Walton invented.
Absolutely agree. Home Depot is an interesting model. I worked there back in earlier days—in 1992 if they sold 3 of something they would order 6 back in. They called it artificially capping their sales if they were out of what a customer wanted to buy. Now they are on computer ordering, so their orders always lag their sales. In 1992, with a 28% gross margin they pulled 6.2 turns and a net profit of 5%. The last year I researched they had 33% gross margins, with 4.0 turns and a net profit of 6%. Seems like the humans did a much better job of ordering than the computers do.